1. If the quoted annual interest rate is 6% with monthly compounding, what is the effective annual rate?

6%

6.09%

6.168%

6.184%

2. A zero-coupon bond costs $67,032 today with face value $100,000 mature in 5 years, what is the continuously compounded rate of return?

6%

8%

8.12%

9.84%

3. A zero-coupon bond costs $67,032 today and pays $100,000 at maturity, and has a continuously compounding annual return of 10%. In how many years does it mature?

4

4.5

4.8

5

4. An investment of $5 today pays a continuously compounded rate of 7.5% per year. How much money will you have in 7 years?

$8.05

$8.12

$8.30

$8.45

5. Using continous compounding rate of 5%, what is the present value of $100 you are to receive in 3 years?

$1,16.18

$95.24

$86.38

$86.07

6. For a quoted annual rate of 8% with monthly compounding, what is its equivalent rate with continuous compounding?

7.10%

7.97%

8.30%

8.55%

7. You take a loan with continuous compounding rate of 6.87% but interest paid semi-annually. If you take a $ 100,000 loan. What is your semi-annual interest payment?

$1732.33

$3435.00

$3494.68

$7111.48

8. A treasury bill matures in 3 months with a face value of $1000. If the continously compounded market interst rate is 1.25%, what is its price?

$987.60

$987.65

$987.58